Government's Role in Economics - superjames1992's Blog

superjames1992's Blog

Government's Role in Economics

Posted on November 11, 2008 at 01:38 AM.

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Alright. Some were asking for a political blog post, so here goes. I actually wrote this about a week ago as I had to do a short, timed essay. It's pretty short. I don't know if it's any good, LOL, but I don't care.

BTW, I do not profess to be an economic expert, so it may be a bit simple for someone who really knows a ton about this stuff.

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One question which certainly poses an important meaning in our time is how much the federal government should be involved in the economy. Things like the $700 billion bailout – though it will likely cost more than $700 billion – and the automotive companies asking for handouts has prompted much discussion over this topic. With more Democrats in the Congress over the next two years, these bailouts don’t look to be over, even though a fair amount of Republicans voted for the bailout, including former presidential candidate John McCain. I think that it is better to let the free market run its course and to have minimal interference from the federal government.

One reason for this belief of mine is because the economy has always worked itself out in the end. While we may struggle a bit during an economic downturn, the economy will eventually turn around. While many say that Franklin D. Roosevelt’s “New Deal” policies got us out of the Great Depression, we really did not emerge from it until World War II began and it can be argued that these programs only lengthened and strengthened the hostility of the depression because the government was bankrupt, as well, and could not pay their workers.

Another reason is that the federal government cannot afford to get too involved. The latest “$700 billion bailout” could cost in upwards of $2 trillion once it’s all said and done. The government can never run anything efficiently and it always leads to excess waste. The United States already faces an enormous federal deficit – I’ve seen reports ranging from $9 trillion to $53 trillion – so the government simply cannot afford to be bailing out everyone that needs help. If these companies are not operating efficiently enough to stay in business, they should fail and liquidate their assets. This is what the free market does. Only the strongest survive in the business world and artificially keeping certain companies alive through bailouts will not help out the economy, it will only worsen it.

Another reason for minimal interference by the government in economics is because that is how capitalism works. If the government gets involved in the economy too much, it essentially becomes nothing short of socialism. Subsidizing losses, as the government is doing now, is socialism. We are not a socialist country and never have been, yet we are now heading in that direction. Besides, only “Big Business” gets these bailouts while small businesses which are failing get nothing, even though the politicians claim that they hate “Big Business” and stand up for the “Working Man.”

In conclusion, the government should limit itself to having as little interference in the workings of the economy in the United States as possible. Over the last fifty years, we have had possibly the best economy in the world. While European countries, such as France, have struggled with high unemployment rates of more than 10%, we have had relatively low unemployment rates and a strong economy. The free market is one of the reasons that made this possible.

Comments

# 1 SPTO @ Nov 11

Good post there. I heard this morning how senate and congressional leaders are up in arms about all the pork in the bailout plan. It seems they all rammed it into law without thinking of the consequences. As for government's role in the economy? I think government has to play some role in it. You did say that America has never been socialist but a lot of the New Deal was socialist in theory, if not practice. You are correct that it didn't really start to flourish until WWII BUT the New Deal programs kept America afloat. The hardest year of the depression was 1934. Things slowly but surely got better as the years went on. The New Deal would've worked eventually but would probably have taken 20 years if there was no war.

As for the bailouts and such. I think the American people have had enough of that crap. I do think Obama's administration will try to help the automotive sector. Remember we're not just talking about the big fat cats but rather the huge amount of people that work for these companies. I can see a solution that won't require a full bailout.

# 2 Krioniq @ Nov 11

On the point that the $700B bailout was rushed and the likely consequences of it were not considered, I agree.

I was previously under the impression that the $700B was necessary to keep credit flowing, without credit, the economy here would have figuratively stopped. That said, with each passing story of a corporate seminar at some high-priced resort (*points at AIG*), or reports of industries that aren't in trouble receiving government money (*points at NFL*) I begin to wonder a bit more what the money was really for.

I think that more should be done with this bailout package to directly help the American people, particularly with the mortgage and foreclosure situation. In addition, helping the automotive industry stay afloat during an economic crunch, where there are so many manufacturing jobs, and helping the industry retool to be relevant in an American without foreign oil, seems like a prudent idea to me.

# 3 bucksfan07 @ Nov 11

excellent blog and I completely agree with you. Our generation will be paying for the $700 billion until we die and now with talks of more bailouts, it's only going to get worst. I don't think the government should bailout anybody, if a business or bank is failing let it fail and stop screwing the American taxpayer even more